Chinese Steel Products Inventory Soars Despite Peak Season

BEIJING, June 15 -- China's steel products market has seen remarkable on year inventory growth at the peak season of sales, signaling demand hasn't improved substantially or outperformed anticipation.

    According to statistics of steel products inventory in some cities, the inventory of hot rolled plates increased 42% on year by the end of May that of medium and heavy plates up by 26% and that of construction steels up by 10%.

    Statistics released by China Iron & Steel Association show that China's apparent consumption of steel products reached 170.65 million tons in the first four months of this year, up 10.95 million tons or 6.86 percent over the same period of last year.

    Over 10 million tonne growth of steel products inventory reflects that the new production capacity hasn't transformed into consumption, thus leading to more inventory.

    The domestic price of steel products has kept climbing for six weeks, particular after the agreement of the benchmark price of iron ore in international market. Domestic major steel enterprises have lifted ex-factory prices of their products by CNY 150 per tonne to CNY 350 per tonne.

    Analysts hold the upward adjustment of steel price will ease pressures of losses, but the possibility of price plunge cannot be ruled out if the inventory keeps rising.

    Local governments are adding support to steel enterprises now. For example, the city of Wuhan, central China's Hunan province, will offer CNY 20 per ton subsidy for direct purchase of Wuhan Iron and Steel Corp.'s products.

    (Source: Chinamining.org)